Komplett Bank - Q3 2020 til publisering - 091120

Interim report THIRD QUARTER 2020

Komplett Bank ASA | Pb. 448 | 1327 Lysaker | Org. nr.: 998997801 | komplettbank.no

2

Highlights and key figures

o Sales have continuously been ramped up during Q3 and Komplett Bank returned to

growth in September with stable loan losses

o Operational efficiency improved as costs were lowered in the quarter

o Financial position and dividend capacity were strengthened during the period

Financial performance o Net loans decreased by NOK 62 million for the full quarter, compared to a decrease of NOK

278 million in Q2. Adjusted for currency effects and portfolio sales, net loans decreased by

NOK 92 million, compared to a decrease of NOK 418 million in the previous quarter

o The reduced decrease in net loans compared to Q2 was driven by increased onboarding of

new customers

o Total income was NOK 269.3 million, down 5.9% compared to NOK 286.2 million in Q2

2020, driven by reduced net interest income due to lower balance of net loans in Q3

o Total operating expenses decreased to NOK 90.9 million from NOK 100.4 million, mainly

driven by a decrease in consulting spend in the quarter

o The cost/Income ratio was 33.8%, down from 35.1% in Q2 2020

o Losses on loans were NOK 80.3 million, compared to NOK 82.9 million in Q2 2020

o The loan loss ratio was 3.8%, equal to the level in Q2 2020

o Profit after tax was NOK 73.4 million, down from NOK 77.0 million in Q2 2020

o Return on equity (ROE)* was 13.9%, down from 16.1% in Q2 2020

Capital Adequacy

o Komplett Bank’s CET1 ratio increased to 22.2% by end Q3 from 21.8% at end Q2 2020

o Total capital ratio increased to 25.7% by end Q3 from 25.3% at end Q2 2020

* ROE = 4 x (Profit after tax in the quarter - AT1 interests) / (quarterly average total equity – average AT1 capital)


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About Komplett Bank ASA

Komplett Bank ASA (the “Bank”) started

operations in March 2014 when the

company received its banking licence from

the Norwegian authorities. Komplett Bank

focuses on offering convenient consumer

financing products.

The Bank’s main products are consumer

loans, comprising Komplett Bank’s annuity

loans launched in May 2019 as well as a

flexible loan product with functionality that

gives the customer more flexibility in use of

the credit line. In April 2020, the Bank

launched a new refinancing product in

Norway. In addition, the Bank offers

“Komplett Bank Mastercard”, a credit card

with product features tailored for online

shopping as well as Point of Sales (POS)

finance products. The Bank offers deposit

products with highly attractive interest rates

in Norway, Germany and Sweden. As a

member of the Norwegian Banks’

Guarantee Fund, customer deposits are

guaranteed up to NOK 2 million (EUR

100,000 in Germany and Sweden) per

customer.

Canica Invest AS, the owner of the leading

web retailer in the Nordic countries, the

Komplett Group, is Komplett Bank’s largest

shareholder with an ownership of 19.2%.

The Bank has a long-term strategic

cooperation with the Komplett Group.

The Bank follows a strategic roadmap

based on geographical and product-wise

diversification and expansion. The strategy

is founded on a digital, scalable, efficient

and low-cost operating model combined

with strong risk control. In the near- to

medium term, lending operations will be

focused on the Nordic region and the Bank

will continue its expansion by developing its

current product portfolio in existing markets.

The Bank operates on a cross-border basis

from Lysaker, outside of Oslo. The

Norwegian banking license provides for

passporting of the Bank’s offering

throughout the entire European Economic

Area (EEA).

Covid-19 update

As a response to the outbreak of Covid-19,

Komplett Bank implemented measures to

safeguard employees and their families in

line with national recommendations. The

organisation has adapted well to the

situation and operational productivity and

customer service level have been

maintained during the quarter.

Customer behaviour has largely been

unchanged and no material impact on

withdrawals was experienced. Komplett

Bank has received a limited number of

forbearance requests from customers. The

Bank has not experienced any negative

impact on default rates so far and loan

losses were stable from the previous

quarter.


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Financial figures for Q3 2020

All figures are prepared and presented in

accordance with IFRS.

Net loans decreased by NOK 62 million.

Split on product segments, loans declined

by NOK 65 million, credit cards decreased

by NOK 3 million and POS increased by

NOK 6 million in the quarter.

Adjusted for currency effects and portfolio

sales as part of the forward flow agreement,

net loans decreased by NOK 92 million in

Q3 2020. The bank cautiously re-started

onboarding of new loans in June, continuing

this practice during Q3.

Net interest income amounted to NOK 271.1

million, down from NOK 279.2 million in Q2

2020. A decrease in net loans during the

quarter is the main driver of the reduction in

net interest margin. Net commissions and

fees amounted to NOK -2.2 million in Q3

2020, down from 1.4 million in the previous

quarter. Decreased provision income, due

to lower conversion on insurance products,

is the main reason for the reduction in net

commissions and fees. The resulting total

income was NOK 269.3 million, down 5.9%

compared to NOK 286.2 million in Q2 2020.

Operating expenses were NOK 90.9 million,

down 9.5% from NOK 100.4 million in Q2

2020. Salary and other personnel expenses

decreased to NOK 34.3 million from 35.7

million in the previous quarter (-3.9%).

1 Losses on loans = 4* Quarterly losses on loans / Average net loans over the period

General administrative expenses

decreased to 30.2 million from NOK 34.7

million in Q2 2020 (-13.0%). The cost-

income ratio including marketing expenses

decreased to 33.8% in Q3 2020 from 35.1%

in the previous quarter, driven by a

temporary increase in Q2 in administrative

costs related to further strengthening risk

and collection capabilities. In addition, the

Q3 cost level was positively impacted by a

one-time effect of NOK 1.1 million related to

reduction in rate for social security taxes.

This reduction is a government measure in

response to the Covid-19 outbreak.

Losses on loans amounted to NOK 80.3

million, including model parameter updates

of NOK 4.0 million. The parameter updates

included transfer of NOK 11.4 million from

the macro reservations that we earlier made

this year and have instead increased our

LGDs. Losses on loans were down from

NOK 82.9 million in Q2 2020. Compared to

previous quarter, the Bank observes that the

forecasts for macro indicators are improving

in Q3. Year to date, the Bank has made

additional macro reservations of NOK 52.8

million in preparedness for possible effects

of the Covid-19 pandemic. The loan loss

ratio1 was 3.8%, equal to the level in Q2

2020.

Profit after tax was NOK 73.4 million, down

4.7% from NOK 77.0 million in the previous

quarter. The decline was mainly driven by a

reduction in net interest income.


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Total assets at 30 September 2020

amounted to NOK 12,571 million (compared

to NOK 11,374 million at 30 June 2020). Net

loans to customers ended at NOK 8,341

million (NOK 8,403 million). Deposits from

customers amounted to NOK 10,064 million

(NOK 8,951 million).

Total equity was NOK 2,239 million (NOK

2,170 million at 30 June 2020). Komplett

Bank had a total capital ratio of 25.7%

(25.3%), and a CET1 ratio of 22.2% (21.8%)

as of 30 September 2020. Bank deposits

and liquid securities amounted to NOK

4,052 million (NOK 2,790 million)

corresponding to 32.2% (24.5%) of total

assets.

Gross defaulted loans at the end of Q3 2020

amounted to NOK 1,929 million, up from

NOK 1,850 million (+4.2%) at 30 June 2020.

Loan impairments amounted to NOK 1,148

million (NOK 1,066 million).

Regulatory update

EU endorsed new regulations in connection

with Capital Requirements Regulation

(CRR) to tightening capital requirements

related to non-performing loans (the

backstop-regulation) in April 2019. The aim

is to secure sufficient capital to meet future

expected losses. In Norway the hearing

process ended in February 2020 and the

Norwegian FSA proposed on 30 September

2020toinclude the recommendation into

Norwegian law. We do not expect the back-

stop rule to have material impact in 2021.

Our expectation is that the impact will be

limited also in 2022 as we have a forward

flow contract in place and our new sales in

Norway has been relatively low from mid-

2019.

Outlook

Komplett Bank follows a diversified multi-

channel marketing and distribution strategy,

has a strong financial position with a

resilient balance sheet and a flexible and

low-cost operating model. Combined with a

well-known brand and strong distribution

capabilities, this puts the Bank in a

favourable competitive position.

The Bank’s strategy for product-wise and

geographical expansion is the cornerstone

to ensuring long-term sustainable growth

and value creation. Going forward, Komplett

Bank will continue to focus on creating

customer value through convenient

financing solutions and efficient and

customer friendly processes.

The Bank considers the potential for growth

in Norway, Finland and Sweden in the

medium term as good. With reference to the

current interest cap and marketing

restriction in Finland, Komplett Bank does

not expect material impact from the

temporary legislation on existing customers

however new sales in Finland is likely to be

negatively impacted short term.

Due to macroeconomic uncertainty related

to Covid-19, Komplett Bank has increased

focus near term on assisting existing

customers while continuing to be prudent on

risk selection. This has resulted in moderate

new lending and marketing expenditure

during the quarter. The Bank re-started

onboarding of new customers in June and

expects to grow in net loans from Q4 2020.


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Further, Komplett Bank expects operational

leverage in combination with its increased

cost focus to contribute to a decrease in

cost/income ratio beyond 2020.

Komplett Bank’s efficient business model

with high net interest income and strong pre

provision earnings provides a solid

foundation for withstanding a potential

increase in loan loss provisions. A variable

cost base and ability to control growth

provides additional loan loss tolerance, as

does the CET1 ratio of 22.2% with

significant headroom to the current CET1

capital requirement of 17.0%. Going

forward, the Bank will continue its focus on

optimising the capital structure including the

ongoing assessment of dividend payment in

line with its dividend policy. Based on the

financial performance year to date, the Bank

considers its dividend capacity to be 30-

50% of 2020 net income while maintaining

ample capacity for growth in the medium

term. However, there is a risk of dividend

restrictions in light of the current

macroeconomic uncertainty.

Komplett Bank’s attractive customer value

proposition coupled with stable financial

performance, a flexible cost base and solid

capital position provide a strong platform for

value creation going forward.

Komplett Bank’s main strategic priorities are

to return to growth whilst maintaining high

focus on credit risk and collection

performance, strengthen operational

performance, and ensure continued robust

financial position and dividend capacity.

Financial Targets

The Bank has established the following

financial targets:

1. Capital Adequacy:

CET1 target of 18.0%

- Comprised of CET1 requirement of

17.0% + 1.0% management buffer

2. Return on Equity

Above 20% return on equity

- The Bank does not expect to meet

its ROE target of 20% in 2020

3. Dividend policy

Excess capital not deployed for growth

purposes will be distributed to

shareholders


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Significant events after the balance sheet date

The Board of directors is not aware of

events after the date of the balance sheet

that may be of material significance to the

accounts.

Other information

The accounting result for Q3 2020 has in

its entirety been booked against retained

earnings. This interim report has been

subject to a review in accordance with

ISRE 2410 (Review of interim financial

information performed by the independent

auditor of the entity). The review report is

enclosed to this report.

-----------------------------------

Lysaker, Bærum, 10 November 2020

Board of Directors, Komplett Bank ASA


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INTERIM STATEMENT OF COMPREHENSIVE INCOME

Amounts in NOK million Note Q3 2020 Q3 2019 YTD 2020 YTD 2019 2019

Interest income 2, 8 308.7 322.6 952.3 949.4 1,282.5

Interest expenses 8 -37.7 -40.2 -116.1 -128.0 -167.2

Net interest income 8 271.1 282.4 836.2 821.4 1,115.3

Income commissions and fees 2, 9 34.5 42.5 112.0 129.1 172.4

Expenses commissions and fees 9 -36.8 -28.2 -108.4 -77.3 -113.8

Net commissions and fees 9 -2.2 14.3 3.6 51.8 58.6

Net gains / losses (-) on certificates and bonds, and

currency0.5 -2.0 6.2 -0.5 1.7

Total income 269.3 294.7 846.0 872.7 1,175.6

Salary and other personnel expenses -34.3 -33.5 -106.1 -100.5 -135.4

General administrative expenses 10 -30.2 -45.8 -94.3 -140.1 -172.4

Total salary and admin. expenses -64.5 -79.3 -200.5 -240.6 -307.8

Ordinary depreciation 7 -18.3 -14.3 -53.5 -38.9 -54.9

Other expenses 11 -8.1 -12.2 -34.3 -62.7 -79.0

Total operating expenses excl. losses on loans -90.9 -105.9 -288.3 -342.2 -441.7

Losses on loans 2 -80.3 -81.8 -295.4 -232.6 -454.3

Pre-tax operating profit 98.1 107.1 262.4 297.9 279.6

Tax expenses -24.7 -26.6 -66.0 -79.7 -76.7

Profit after tax 73.4 80.5 196.4 218.3 202.9

Attributable to

Shareholders 68.1 79.5 189.1 215.5 200.0

Additional Tier 1 capital investors 5.3 1.0 7.3 2.8 2.9

Profit after tax 73.4 80.5 196.4 218.3 202.9

Earnings per share (NOK) 0.37 0.44 1.03 1.20 1.11

Diluted earnings per share (NOK) 0.36 0.43 1.01 1.15 1.06

Comprehensive income

Amounts in NOK million

Profit after tax 73.4 80.5 196.4 218.3 202.9

Other comprehensive income - - - - -

Comprehensive income for the period 73.4 80.5 196.4 218.3 202.9


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STATEMENT OF FINANCIAL POSITION AS AT THE END OF THE PERIOD

-----------------------------------

Lysaker, Bærum, 10 November 2020

Board of Directors, Komplett Bank ASA

Amounts in NOK million Note 30.09.2020 31.12.2019 30.09.2019

Assets

Loans and deposits with credit institutions 4 1,466.8 614.7 1,145.2

Net loans to customers 2,4 8,341.2 8,495.8 8,361.4

Certificates and bonds 4 2,585.2 1,329.8 1,197.4

Other intangible assets 7 151.9 143.3 124.9

Deferred tax assets - 0.8 -

Fixed assets 7 14.2 17.3 18.3

Other receivables 4 12.2 18.8 24.7

Total assets 12,571.5 10,620.4 10,872.0

Equity and liabilities

Deposits from and debt to customers 4 10,063.6 8,519.5 8,754.8

Other debt 4,6 139.0 149.5 125.7

Subordinated loans (Tier 2) 4,5 65.0 64.9 64.8

Deferred tax payable 65.2 - 40.1

Tax payable - 37.0 23.7

Total liabilities 10,332.8 8,770.9 9,009.2

Share capital 3,12 186.5 184.1 182.8

Share premium reserve 3 786.7 786.7 786.7

Other paid-in equity 3 47.9 45.8 44.9

Retained earnings 3 973.1 788.4 803.8

Additional Tier 1 capital 3 244.6 44.6 44.6

Total equity 2,238.7 1,849.6 1,862.8

Total equity and liabilities 12,571.5 10,620.4 10,872.0


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STATEMENT OF CASH FLOW FOR THE PERIOD

STATEMENT OF CHANGES IN EQUITY

Amounts in NOK million Note Q3 2020 Q3 2019 YTD 2020 YTD 2019 2019

Cash flow from operating activities

Pre-tax operating profit 98.1 107.1 262.4 297.9 279.6

Taxes paid - - -37.0 -87.0 -107.2

Ordinary depreciation 7 18.3 14.3 53.5 38.9 54.9

Change in impairments on loans to customers 2 82.0 60.4 338.1 136.7 338.5

Change in loans to customers 2, 4 -19.9 -331.4 -183.5 -653.8 -989.9

Effects of currency on loans to customers in the period 56.9 55.7 431.0 -30.2 -18.4

Change in deposits from and debt to customers 4 1,112.5 322.9 1,544.1 1,389.1 1,153.9

Effects of currency on deposits from and debt to customers

in the period-72.7 -61.0 -362.5 -58.3 -46.9

Change in certificates and bonds 4 -1,087.0 -46.6 -1,255.4 -761.0 -893.4

Change in accruals 1.6 -29.5 1.8 3.7 31.6

Net cash flow from operating activities 189.7 91.9 792.4 276.1 -197.2

Cash flows from investing activities

Net Investments/sale of fixed assets 7 - - -1.0 -0.4 -0.6

Net Investments/sale of intangible assets 7 -17.2 -19.5 -58.6 -65.2 -98.6

Net cash flow used in investing activities -17.2 -19.5 -59.6 -65.6 -99.2

Cash flows from financing activities

Paid-in equity 0.2 - 2.4 24.9 26.2

Net receipts from issue of additional Tier 1 capital - - 200.0 - -

Repayment of senior unsecured bond - -239.0 - -400.0 -400.0

Payment to Additional Tier 1 capital investors -5.3 -1.0 -7.3 -2.8 -3.8

Net cash flow from financing activities -5.1 -240.0 195.1 -378.0 -377.6

Net cash flow for the period 167.4 -167.6 927.9 -167.5 -674.0

Cash and cash equivalents at the start of the period 4 1,292.1 1,313.5 614.7 1,232.4 1,232.4

Effects of currency on loans and deposits with credit

institutions in the period7.2 -0.8 -75.8 80.3 56.3

Cash and cash equivalents at the end of the period 4 1,466.8 1,145.2 1,466.8 1,145.2 614.7


Share capital

Share

premium

reserve

Additional

Tier 1 capital

Other paid in

capital

Retained

earningsTotal Equity

Equity as at 01.01.2019 172.7 771.9 44.6 42.2 588.4 1,619.8

Profit after tax - - - - 202.9 202.9

Share capital increase 11.4 14.8 - - - 26.2

Changes in equity due to share options program - - - 3.6 - 3.6

Paid interest to Additional Tier 1 capital investors - - - - -2.9 -2.9

Equity as at 31.12.2019 184.1 786.7 44.6 45.8 788.4 1,849.6

Profit after tax - - - - 196.3 196.3

Paid-in Additional Tier 1 capital - - 200.0 - -4.5 195.5

Changes in equity due to share options program 2.4 - - 2.1 - 4.5

Paid interest to Additional Tier 1 capital investors - - - - -7.2 -7.2

Equity as at 30.09.2020 186.5 786.7 244.6 47.9 973.1 2,238.7


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Note 1 - General accounting principles

The condensed interim financial statements have been prepared in accordance with IAS 34, Interim

Financial Reporting.

All numbers in this report are in NOK 1,000,000 unless otherwise specified.

Note 2 – Loans to customers

The Bank is applying forward looking elements for its credit loss model. The overall losses are adjusted

by considering a certain set of macro-economic variables. The credit losses are adjusted on a portfolio

basis and are based on the expected development of the economies in the countries in which the Bank

is offering loans. The macro-economic variables are not utilised to transfer loans among the various

stages.

The Bank is applying three sets of indicators to the expected credit loss models for the respective

countries: 1) the expected development in the unemployment rate, 2) the growth in the gross domestic

product and 3) the short-term interest rate level. The expected credit loss model employs forecasted data

for the years 2020-2022, which corresponds to the expected lifetime of the Bank’s loan portfolio. The

forecasted data are based on macro-economic indicators sourced from a specialised provider.

The Bank applies three scenarios when considering the macro-economic adjustment: a positive outlook,

a neutral outlook and a negative outlook. The Bank calculates and assigns a probability and weight to

these each scenario based on the forecasts and expectations for the macroeconomic situation. There

are uncertainties related to the estimates as they are forward-looking.

The Bank has reversed loss provisions of NOK 11.4 million in Q3 2020 related to macro-economic

considerations. Losses on loans in Q3 includes parameter updates of NOK 4.0 million related to reversal

of macro-economic factors, LGD, PD and other model updates. Year to date the total loss provision

related to macro-economic factors amounts to a total of NOK 52.8 million.

Loans to customers

Defaulted loans

* Defaulted loans comprise amongst other of loans which are 91 days or more overdue according to

agreed payment schedule. Such loans will continue to be considered defaulted regardless of future

payment status. Defaulted loans also comprise of loans with indications of unlikeliness to pay.

Amounts in NOK million 30.09.2020 31.12.2019 30.09.2019

Loans to customers 9,489.4 9,305.9 8,969.8

Gross lending 9,489.4 9,305.9 8,969.8

Impairment of loans 1,148.2 810.1 608.3

Net loans to customers 8,341.2 8,495.8 8,361.4


Gross defaulted loans * 1,928.6 1,284.9 1,060.6

Impairment of loans (stage 3) 801.5 493.6 356.2

Net defaulted loans 1,127.1 791.3 704.4


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Information on products and geographical distribution

Income

Net Loans

Impairment


Credit cards POS Finance

Income Q3 2020 Norway Finland Sweden NO/FI/SE NO/SE

Interest income 134.2 85.3 35.9 34.5 18.5 0.3 308.7

Income commissions and fees 6.4 6.2 1.9 4.8 13.0 2.2 34.5

Total 140.6 91.5 37.8 39.3 31.5 2.5 343.3


Income Q3 2019 Norway Finland Sweden NO/FI/SE NO/SE

Interest income 154.5 76.9 33.2 40.5 12.8 4.7 322.6


Total 165.8 83.5 34.1 50.7 23.0 8.0 365.1


Income YTD 2020 Norway Finland Sweden NO/FI/SE NO/SE

Interest income 408.8 267.4 113.6 104.2 53.2 5.1 952.3


Total 430.6 287.9 119.4 125.1 93.3 8.0 1,064.3


Income YTD 2019 Norway Finland Sweden NO/FI/SE NO/SE

Interest income 479.6 208.7 85.2 125.5 34.6 15.8 949.4


Total 512.1 229.1 90.5 156.7 69.5 20.6 1,078.5


Income 2019 Norway Finland Sweden NO/FI/SE NO/SE

Interest income 625.4 297.3 122.2 163.5 52.4 21.8 1,282.5


Total 669.6 324.7 127.8 204.4 102.1 26.3 1,454.9

Consumer loans Not allocated

to product


to product


to product


to product


to product

Total

Total

Total

Total

Total



Net loans 30.09.2020 Norway Finland Sweden NO/FI/SE NO/SE

Net loans to customers 3,288.4 2,566.6 1,216.3 753.3 516.6 - 8,341.2

Total 3,288.4 2,566.6 1,216.3 753.3 516.6 - 8,341.2


Net loans31.12.2019 Norway Finland Sweden NO/FI/SE NO/SE

Net loans to customers 3,699.5 2,428.9 1,061.8 800.5 505.0 - 8,495.8

Total 3,699.5 2,428.9 1,061.8 800.5 505.0 - 8,495.8


Net loans 30.09.2019 Norway Finland Sweden NO/FI/SE NO/SENet loans to customers 3,913.3 2,303.4 959.5 785.2 400.0 - 8,361.4

Total 3,913.3 2,303.4 959.5 785.2 400.0 - 8,361.4


to product


to product


to product

Total

Total

Total



Impairment 30.09.2020 Norway Finland Sweden NO/FI/SE NO/SE

Impairment of loans to customers 311.2 496.5 228.4 71.8 40.4 - 1,148.2

Total 311.2 496.5 228.4 71.8 40.4 - 1,148.2



Impairment of loans to customers 286.3 319.1 115.4 57.1 32.3 - 810.1

Total 286.3 319.1 115.4 57.1 32.3 - 810.1



Impairment of loans to customers 222.1 218.3 80.7 56.5 30.8 - 608.3

Total 222.1 218.3 80.7 56.5 30.8 - 608.3


to product


to product


to productTotal

Total

Total


13

Reconciliation of gross lending to customers


14

Reconciliation of impairment of loans


15

Note 3 – Regulatory capital

Total capital


Share capital 186.5 184.1 182.8

Share premium 786.7 786.7 786.7

Other equity 1,021.0 834.2 848.8

Phase-in effects of IFRS 9 176.3 194.3 160.7

Deductions:

Deferred tax assets and other intangible assets and deductions -154.5 -145.4 -126.1

Common equity Tier 1 including phase-in impact of IFRS 9 2,015.9 1,853.9 1,852.9

Additional Tier 1 capital 244.6 44.6 44.6

Core capital including phase-in impact of IFRS 9 2,260.5 1,898.4 1,897.4

Subordinated loans (Tier 2) 65.0 64.9 64.8

Total capital including phase-in impact of IFRS 9 2,325.4 1,963.3 1,962.2

Capital excluding phase-in impacts of IFRS 9


Common equity Tier 1 excluding phase-in impact of IFRS 9 1,839.6 1,659.6 1,692.1

Core capital excluding phase-in impact of IFRS 9 2,084.2 1,704.1 1,736.7

Total capital excluding phase-in impact of IFRS 9 2,149.2 1,769.0 1,801.5

Calculation basis


Loans and deposits with credit institutions 293.4 122.9 229.0

Loans to customers and IFRS 9 phase-in effects 6,744.5 6,745.2 6,591.2

Certificates and bonds 178.5 9.1 41.0

Other assets 26.4 36.2 43.1

Calculation basis credit risk 7,242.7 6,913.4 6,904.4

Calculation basis operational risk 1,822.6 1,822.6 1,331.8

Total calculation basis including phase-in impact of IFRS 9 9,065.4 8,735.9 8,236.2

Total calculation basis excluding phase-in impact of IFRS 9 8,901.0 8,560.2 8,092.1

Capital ratios including phase-in impact of IFRS 9 30.09.2020 31.12.2019 30.09.2019

Common equity tier 1 (%) 22.2 % 21.2 % 22.5 %

Core capital (%) 24.9 % 21.7 % 23.0 %

Total capital (%) 25.7 % 22.5 % 23.8 %

Capital ratios excluding phase-in impact of IFRS 9

Common equity tier 1 (%) 20.7 % 19.4 % 20.9 %

Core capital (%) 23.4 % 19.9 % 21.5 %

Total capital (%) 24.1 % 20.7 % 22.3 %

LCR (Liquidity Coverage Ratio) is 1 013 % and NSFR (Net stable funding ratio) is 212 % as of 30.09.2020


16

Note 4 - Financial instruments Financial instruments at fair value

Financial instruments at fair value is measured at different levels:

Level 1

Financial instruments in level 1 are determined based on quoted prices in active markets for identical

financial instruments available on the balance sheet date.

Level 2

Financial instruments in level 2 are determined based on inputs other than quoted prices, but where

prices are observable either directly or indirectly. These include quoted prices in markets that are not

active.

Level 3

Valuation methods based on non-observable market data are used when valuation cannot be

determined in level 1 or 2.

Financial instruments at amortised cost

Financial instruments at amortised cost are valued at originally determined cash flows, adjusted for any

impairment losses.


Certificates and bonds - level 1 1,679.7 1,239.0 786.9

Certificates and bonds - level 2 905.5 90.8 410.5

Total financial instruments at fair value 2,585.2 1,329.8 1,197.4


Loans and deposits with credit institutions 1,466.8 614.7 1,145.2

Net loans to customers 8,341.2 8,495.8 8,361.4

Other receivables 12.2 18.8 24.7

Total financial assets measured at amortised cost 9,820.2 9,129.2 9,531.3

Deposits from and debt to customers 10,063.6 8,519.5 8,754.8

Other debt (note 6) 139.0 149.5 125.7

Subordinated loans (note 5) 65.0 64.9 64.8

Total financial liabilities measured at amortised cost 10,267.6 8,733.9 8,945.3


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Note 5 - Subordinated loans

Note 6 – Specification of other debt


Subordinated loans - ISIN NO0010757768 65.0 64.9 64.8

Total subordinated loans 65.0 64.9 64.8

3 months NIBOR + 5.0 %. First call February 2021


Payables to suppliers 13.9 39.0 14.8

Social security tax 6.4 5.3 3.6

Other l iabil ities 118.7 105.2 107.3

Total other debt 139.0 149.5 125.7


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Note 7 – Intangible assets and fixed assets

Other intangible assets and fixed assets are depreciated on a straight-line basis over their lifetime.

Intangible assets consist to a high degree of IT systems and rights acquired and developed in-house.

Right-of-use assets relates to leasing agreements and are depreciated over their lifetime. No impairments

have been recognised for other intangible assets or fixed assets either in the previous or current period.


Fixtures and

fittings

Office

machines

Intangible

assets

Right-of-use

assetsOther Total

Historical cost 30.06.2020 2.3 1.1 291.0 20.1 0.2 314.7

Q3 2020

Additions - - 17.2 - - 17.2

Historical cost 30.09.2020 2.3 1.1 308.2 20.1 0.2 331.9

Depreciations 30.06.2020 2.0 0.6 139.3 5.8 - 147.7

Q3 2020 0.3 0.0 17.2 0.8 - 18.3

Accumulated depreciations 30.09.2020 2.3 0.6 156.2 6.6 - 165.8

Book value 30.09.2020 0.3 0.4 151.9 13.5 0.2 166.1


Fixtures and

fittings

Office

machines

Intangible

assets

Right-of-use

assetsOther Total

Historical cost 30.06.2019 2.3 1.0 196.7 17.2 0.2 217.4

Q3 2019

Additions - - 19 2 - 21.6

Historical cost 30.09.2019 2.3 1.0 216.1 19.4 0.2 239.0

Depreciations 30.06.2019 1.2 0.5 78.0 1.7 - 81.3

Q3 2019 0.1 0.0 13.1 1.1 - 14.3


Book value 30.09.2019 1.0 0.5 124.9 16.6 0.2 143.3


Fixtures and

fittings

Office

machines

Intangible

assets

Right-of-use

assetsOther Total

Historical cost 01.01.2020 2.3 1.1 249.6 19.4 0.2 272.6

YTD 2020

Additions 0.0 - 58.6 0.7 - 59.3

Historical cost 30.09.2020 2.3 1.1 308.2 20.1 0.2 331.9

Depreciations 01.01.2020 1.3 0.6 106.0 4.0 - 111.9

YTD 2020 0.7 0.0 50.2 2.6 - 53.5


Book value 30.09.2020 0.3 0.4 151.9 13.5 0.2 166.1


Fixtures and

fittings

Office

machines

Intangible

assets

Right-of-use

assetsOther Total

Historical cost 01.01.2019 1.9 1.0 151.0 - 0.2 154.0

YTD 2019

Additions 0.4 0.1 65.2 19.4 - 85.0

Historical cost 30.09.2019 2.3 1.0 216.1 19.4 0.2 239.0

Depreciations 01.01.2019 1.0 0.4 55.0 - - 56.4

YTD 2019 0.3 0.1 35.7 2.8 - 38.9


Book value 30.09.2019 1.0 0.5 124.9 16.6 0.2 143.3


Fixtures and

fittings

Office

machines

Intangible

assets

Right-of-use

assetsOther Total

Historical cost 01.01.2019 1.9 1.0 151.0 - 0.2 154.0

YTD 2019

Additions 0.4 0.1 98.6 19.4 - 118.6

Historical cost 31.12.2019 2.3 1.1 249.6 19.4 0.2 272.6

Depreciations 01.01.2019 1.0 0.4 55.0 - - 56.4

2019 0.3 0.2 50.6 3.8 - 54.9


Book value 31.12.2019 1.0 0.5 143.3 15.6 0.2 160.6


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Note 8 - Net interest income

Note 9 - Net commissions and fees

Note 10 - General administrative expenses

Note 11 - Other operating expenses

Amounts in NOK million Q3 2020 Q3 2019 YTD 2020 YTD 2019 2019

Interest income from loans to customers 308.6 318.0 947.9 933.7 1,260.7

Interest income from loans and deposits with credit institutions 0.0 4.5 4.1 14.4 20.3

Interest from certificates and bonds 0.1 0.1 0.3 1.4 1.4

Total interest income 308.7 322.6 952.3 949.4 1,282.5

Interest expense from deposits from and debt to customers 32.6 35.1 96.6 106.3 140.2

Interest expense from subordinated loan (Tier 2) 0.9 1.2 3.0 8.7 9.9

Other interest expenses 4.2 3.8 16.5 12.9 17.1

Total interest expenses 37.7 40.2 116.1 128.0 167.2

Net interest income 271.1 282.4 836.2 821.4 1,115.3


Insurance services 11.5 14.6 37.7 45.0 58.4

Other fees and commissions and bank services income 23.0 27.9 74.3 84.1 114.0

Total income commissions and fees 34.5 42.5 112.0 129.1 172.4

Agent provisions 23.7 19.1 73.3 53.6 75.2

Other expenses comissions and fees 13.1 9.1 35.1 23.7 38.6

Total expenses commissions and fees 36.8 28.2 108.4 77.3 113.8

Net commissions and fees -2.2 14.3 3.6 51.8 58.6


Direct marketing expenses 6.1 20.9 15.7 73.1 84.0

IT-expenses 15.2 12.1 51.2 33.5 33.5

Other general administrative expenses 8.9 12.8 27.4 33.5 54.9

Total general administrative expenses 30.2 45.8 94.3 140.1 172.4


External audit and related services 1.0 - 3.6 2.6 3.7

Other consultants 2.0 3.3 11.3 22.5 27.2

Insurance 0.5 0.2 1.5 0.7 1.1

Other 4.6 8.7 9.7 36.9 47.1

Total other operating expenses 8.1 12.2 34.3 62.7 79.0


20

Note 12 - Related parties

Komplett Bank is not part of a group. However, the Bank's largest shareholder is Canica Invest AS with

19.2% of the shares in the Bank. Canica Invest AS owns the majority of the shares in Komplett AS.

Komplett Bank is financially and operationally independent of Komplett AS and its affiliated companies

(the "Komplett Group").

Komplett AS and the Bank have entered into a cooperation agreement in relation to IP rights, marketing

cooperation and other services. The agreement aims to give the Bank the right to use "Komplett Bank"

as its name, and the profile and graphic design of komplett.no. The agreement gives the Bank the right

to use all the intellectual property rights of Komplett AS that are necessary to achieving this purpose.

As an extension to the cooperation agreement, Komplett AS and the Bank have entered into an

agreement on product cooperation in relation to the credit card of the Bank and the credit card's ancillary

customer loyalty bonus programme. The agreement aims to promote sales and the use of the credit card,

as well as contributing to promote sales for Komplett AS. Pursuant to this agreement, the parties shall

arrange for customer loyalty bonus in relation to the use of the Bank's credit card on, among other,

purchases from Komplett AS. The product cooperation agreement for credit cards was prolonged Q2

2018 for another 5 years.

Furthermore, the Bank is engaged in a cooperation with the Komplett Group, in particular in connection

with its credit card product as well as its payment solutions and distribution of Point-of-sales finance

products, which enables the Bank to distribute its products towards customers on Komplett’s web shop

platforms.

Note 13 - Subsequent events

The board is not aware of events after the date of the balance sheet that may be of material significance

to the accounts.

Note 14 - Leasing agreements

Komplett Bank is leasing premises for Vollsveien 2A and 2B at Lysaker. The agreement expires

31.12.2023, and the annual rent totals NOK 4.6 million excluding VAT. The Bank has no other significant

leasing agreements.

Note 15 – Contingent liabilities The tax authorities disagree with the Bank`s treatment of reverse charge of VAT for certain services after their local control for the period January 2017 to April 2018. Komplett Bank disagrees with the provisional conclusion, and there is no provision recognized in the interim statement for the period ending on September 30, 2020. The timing of the final conclusion by the tax authorities and the conclusion itself, are uncertain. If the Bank elects to accept the tax authority`s conclusion or the case goes to a court with a negative outcome for the Bank, the estimated negative cash flow impact based on the above amounts to a total of NOK 2.2 million.

PricewaterhouseCoopers AS, Dronning Eufemias gate 71, Postboks 748 Sentrum, NO-0106 Oslo T: 02316, org. no.: 987 009 713 MVA, www.pwc.no Statsautoriserte revisorer, medlemmer av Den norske Revisorforening og autorisert regnskapsførerselskap

To the Board of Directors of Komplett Bank ASA

Report on Review of Interim Financial Information

Introduction

We have reviewed the accompanying interim balance sheet of Komplett Bank ASA as of 30 September 2020, the income statement, the statement of comprehensive income, the statement of changes in equity and the cash flow statement for the nine-month period then ended, and a summary of significant accounting policies and other explanatory notes. Management is responsible for the preparation and fair presentation of this interim financial information in accordance with IAS 34 Interim Financial Reporting. Our responsibility is to express a conclusion on this interim financial information based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (ISAs), and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information does not present fairly, in all material respects, the financial position of the entity as at 30 September 2020, and its financial performance and its cash flows for the nine-month period then ended in accordance with IAS 34 Interim Financial Reporting.

Oslo, 10 November 2020 PricewaterhouseCoopers AS Erik Andersen State Authorised Public Accountant

Note: This translation from Norwegian has been prepared for information purposes only.

Komplett Bank - Q3 2020 til publisering - 091120

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